Buy-to-Let or Buy-to-Sell During Pandemic in Vietnam?

Answering this question, CBRE Vietnam said that if you buy an apartment for investment in Vietnam, it usually has on of two purposes: investment for rental returns or investment for resale to obtain high capital gains. As far as Rental investment goes, according to CBRE, the rental price in big cities is getting lower due to the crisis.

The rental yield in Ho Chi Minh City, which is considered to have high rental demand, is only at 4% for projects with good rental capacity, while other projects are only at 3% on average. We see that this is a very low rental yield compared to the expectation of most apartment rental investors.

Ho Chi Minh City Skyline

As for the buying and selling investment, it depends on when the investor intends to sell: after a year, 2 years or 3 years from the time of buying the property.

According to CBRE, the selling price of apartments in Hanoi and Ho Chi Minh City in the past year has increased. For the same project, the selling price at different times will be extremely different. There will be projects where the price is barely increasing, but there are also projects where the price increases by 5-10%. Here, it depends a lot on what product you intend to invest in, where it is located, how it is accessible and how convenient is the surrounding.

After 2 years of pandemic, people’s housing needs have changed a lot, and the criteria to buy and rent a house have also changed. Whether or not a house goes up in price depends on many criteria such as whether it is well managed and operated, how quality is maintained, and what amenities and utilities are included such as supermarkets and shops. Is there a convenience store in that area, is there a pharmacy… If you can’t go out, can you do sports within the compound?

This expert said, currently, we also see a very high demand for working from home. Recently, a quick survey with CBRE’s customers concluded that up to 30% of those surveyed would like to keep working from home and about 20% have rotational work. With such a change in demand for places to live and work, the apartments themselves must also change to match the criteria of wanting to work at home.

Thus, answering the question of whether to invest now or not will depend on a series of criteria that buyers and tenants set for the current “new normal” period.

Sharing earlier, senior director of CBRE Vietnam said, it is clear that the rental yield is very low in the two cities, especially in Ho Chi Minh City. During the peak period of the apartment market, around 2015-2016, the number of apartments offered for sale was extremely high, and buyers were also abundant. For luxury apartments, up to 50-60% of buyers buy-to-let. Yields at that time where also quite high, about 7-7.5%/year, even in some projects up to 8%.

However, at that time, CBRE had definitely predicted Yields would decrease due to the huge competition from the high supply. And over the years, we’ve seen the rental yield drop steadily year over year from 7.5%, to 6.5%, 6% to 5%. That is, even if not yet affected by the Covid-19 pandemic, the Yields from leasing decreased.

When doing a market survey of the first 6 months of 2021, it was found that the rental yield dropped to somewhere around 2.5-4% in HCMC. The reason is that the landlord has to reduce the rental price, as consequence of many foreigners having to return home. 

Along with the decline in rental yields, the demand for individuals to buy apartments to let will definitely decrease.

For more information about the real estate market in Vietnam, please contact me directly via email at: Your trusted property agent in Vietnam.

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